Strategic corporate social responsibility

Lisa Planer-Friedrich and Marco Sahm

No 124, BERG Working Paper Series from Bamberg University, Bamberg Economic Research Group

Abstract: We examine the strategic use of Corporate Social Responsibility (CSR) in imperfectly competitive markets. The level of CSR determines the weight a firm puts on consumer surplus in its objective function before it decides upon supply. First, we consider symmetric Cournot competition and show that the endogenous level of CSR is positive for any given number of firms. However, positive CSR levels imply smaller equilibrium profits. Second, we find that an incumbent monopolist can use CSR as an entry deterrent. Both results indicate that CSR may increase market concentration. Third, we consider heterogeneous firms and show that asymmetric costs imply asymmetric CSR levels.

Keywords: Corporate Social Responsibility; Market Concentration; Cournot Competition; Entry Deterrence; Strategic Delegation; Evolutionary Stability (search for similar items in EconPapers)
JEL-codes: D42 D43 L12 L13 L21 L22 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bamber:124

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